Holding Richer Into U.S. CPI

Core global FI markets are a touch shy of best levels but still firmer on the day, respecting recent ranges.

• Cash Tsys are 2.5-4.0bp richer across the curve, with the belly/intermediates outperforming.
• German yields are 1.5-2.5bp lower, with a very light flattening bias.
• 10-Year peripherals outside of Greece generally outperform in the EGB sphere.
• Gilt yields are 1.5-4.5bp lower, with a flattening bias on the curve.
• Reduced issuance pressure in EUR IG markets (vs. the last couple of sessions), sizeable demand at the latest Irish bond syndication and smooth enough digestion of today’s short end BTP supply helps support EGBs.
• Geopolitical tension surrounding the Middle East may also be providing some support.
• Meanwhile, some of the short setting seen in wider core global FI markets over the past couple of weeks may be getting unwound into today’s major event risk, which comes in the form of the U.S. CPI release.
• Real money long positioning in core global FI markets is seemingly a little cleaner than it was in mid-December.
• An uptick in crude oil futures could be helping cap the bid.